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A Decade of CPEC:
Unveiling the Benefits to Pakistan and
Charting the Future Direction
By Rao Muhammad Ali Khan, Research Associate,
MUSLIM Institute (Islamabad - London)
 
 
 
Over the past decade, the China-Pakistan Economic Corridor (CPEC) has emerged as a transformative economic initiative that has fostered a robust partnership between China and Pakistan.
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Over the past decade, the China-Pakistan Economic Corridor (CPEC) has emerged as a transformative economic initiative that has fostered a robust partnership between China and Pakistan. Construction of modern roads and highways, such as the Peshawar-Karachi motorway, the Gwadar East-Bay Expressway, Karakoram Highway PH2 has significantly improved transportation within the country. These infrastructural improvements have not only reduced travel times but also boosted trade and commerce between different regions. In the past, energy crisis crippled Pakistan, hampering its economic growth. CPEC played a crucial role in alleviating this issue by developing coal, wind, solar and hydel power plants that added 11,400 MW to the national grid (Table 2).

Gwadar Port, operational since March 2018, holds immense strategic importance for Pakistan, offering a potential gateway for trade with Central Asia, the Middle East, and Africa 1.
Gwadar Port development has transformed it into a deep-sea port capable of handling larger vessels its strategic location offers immense opportunities for Pakistan to become a regional trade and transit hub (first ship carrying Afghan transit trade arrived on 14th Jan 2020) 2.

Establishment of four Special Economic Zones (SEZs) across Pakistan, out of initial proposal of nine priority zones, has attracted foreign direct investment 3. Though still under development, focusing on less developed areas these SEZs have generated thousands of job opportunities, bolstered local economy, contributed to regional economic development, and helped bridge the development gap between different provinces.

Completion of KKH Ph2 has strengthened economic ties between China and Pakistan by securing and upgrading existing transportation network 4. This connectivity has not only increased bilateral trade but also opened new avenues for economic cooperation and people-to-people exchanges.
 
Focused on developing less-developed regions in Pakistan, such as Balochistan and Khyber Pakhtunkhwa, CPEC has contributed to regional economic development and helped bridge the development gap between different provinces. According to a report published by PricewaterhouseCoopers (PwC), in Feb 2017, Pakistan will be the world’s 20th largest economy by the year 2030 and 16th by 2050 5. CPEC will result in the creation of over 2.3 million new jobs.
 
 
The cumulative value of all CPEC projects is expected to be around $61 billion (Table 1) with future projects amplifying its overall valuation. CPEC has significant strategic and economic importance for China and Pakistan as it links China with markets in the Middle East, Africa, and Asia. CPEC is the flagship project of BRI, declared by China’s President Xi as ‘the project of the century’, the Belt and Road Initiative (BRI) will deliver an estimated $5 trillion worth of investment into the infrastructure of 52 countries.
CPEC Planning
The planning of CPEC follows four stages 6:
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1
Early Harvest:

Focused on Energy sector, most projects are either already completed or in final stage adding approximately 11,410 MW (Table 2) electricity to national grid easing energy shortages
2
Short term projects:

Focused on transportation and infrastructure projects e.g., roads, Gwadar development, optic fibre network and the hydel, coal mining and power projects (Table 3 & 4)
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3
Medium term projects:

Railways and Industrial zones (Table 3)
4
Long term projects:

Completion of Industrial zones, Agriculture, Tourism etc. (Table 5)
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CPEC Financing
CPEC is financed via four main instruments:
Investments:

The money under investment projects is borrowed by the Chinese firms that undertake the project. These commercial loans are given on interest rates between 4% and 5%,
Concessional Loans:

These loans are given out to the Government of Pakistan at an interest rate of 2% with a repayment period of 20 years. The first payment for these loans must be made within 5 years from the start of the concession period,
Interest-Free Loans:

A very small proportion of the overall CPEC finances, these are zero interest loans with various payback periods,
Grants:

Grants are provided by the Chinese government aimed at increasing state capacity and cooperation.
(Table 1)
Summary of CPEC's Major Projects
Major Categories # of Projects Estimated Cost (US $ Million) Projected Cost (US $ Million) Direct Job Opportunities
Energy 21 $26,370 for 13,810MW $33,000 for 17,045MW 71,959
Infrastructure (Road) 5 $5,341 $5,341 31,474
Infrastructure (Rail) 3 $8,237 $8,237 14,400
Infrastructure (Optical Fiber) 1 $44 $44 1,294
Gwadar 12 $793 $10,000 ‐ $14,000 77,700
Total 42 $40,785 $60,622 196,827
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CPEC has provided enormous opportunities for Pakistan to grow economically. It is an engine for economic growth and is expected to increase Pakistan’s GDP growth by 2% to 3%. CPEC has also facilitated in overcoming crucial energy, transport infrastructure and supply chain bottlenecks. Under CPEC, development of Gwadar would ensure strengthening of maritime sector particularly the coastal tourism and local fishery industry thereby benefitting the local communities.
(Table 2)7
Energy: Completed Projects
# Project Name MW Location Cost USD Million
1 1320MW Sahiwal Coal-fired Power Plant 1,320.0 Qadarabad, Sahiwal $1,912.2
2 1320MW Coal-fired Power Plant at Port Qasim Karachi 1,320.0 Port Qasim $1,912.2
3 1320MW China Hub Coal Power Project, Hub Balochistan 1,320.0 Hub, Balochistan $1,912.2
4 660MW Engro Thar Coal Power Project 660.0 Thar-Block-II, Sindh $995.4
5 1000MW Quaid-e-Azam Solar Park (Bahawalpur) 600.0 Bahawalpur, Punjab $781.0
6 50 MW Hydro China Dawood Wind Farm, Gharo, Thatta 50.0 Bhanbore, Gharo, District Thatta $112.7
7 100MW UEP Wind Farm, Jhimpir, Thatta 100.0 Jhampir, Thatta $150.0
8 50MW Sachal Wind Farm ,Jhimpir, Thatta 50.0 Jhampir, Thatta $134.0
9 100MW Three Gorges Second and Third Wind Power Project 100.0 Jhampir, Thatta $150.0
10 Matiari to Lahore ±660 KV HVDC Transmission Line Project 4,000.0 Matiari to Lahore $1,658.3
11 720MW Karot Hydropower Project, AJK/Punjab 720.0 River Jehlum $1,720.0
12 330MW HUBCO Thar Coal Power Project (Thar Energy) 330.0 Thar-Block-II, Sindh $497.7
13 1320MW SSRL Thar Coal Block-I 7.8 mtpa & Power Plant (2×660MW) (Shanghai Electric) 1,320.0 Thar Block - I $1,912.1
14 330MW HUBCO ThalNova Thar Coal Power Project 330.0 Thar-Block-II, Sindh $497.7
Total 10,240.0 $14,345.5
Energy: Under Construction Projects
# Project Name MW Location Cost USD Million
15 884MW Suki Kinari Hydropower Project, KP 870.0 District Mansehra, KPK $2,000.0
16 300MW Coal-Fired Power Project at Gwadar 300.0 Gwadar $542.3
Total 1,170.0 $2,542.3
Energy: Under Consideration Projects
# Project Name MW Location Cost USD Million
17 1124MW Kohala Hydropower Project, AJK 1,124.0 Muzaffarabad $2,400.0
18 700.7MW Azad Pattan Hydropower Project, AJK/Punjab 700.7 Jehlum River $1,600.0
19 1320 MW Thar Mine Mouth Oracle Power Plant & surface mine 1,320.0 Thar Block - IV $1,912.2
20 50MW Cacho Wind Power Project 50.0 Jhampir, District Thatta
21 50MW Western Energy (Pvt.) Ltd. Wind Power Project 50.0 Jhampir, District Thatta
Total 3,244.7 $5,912.2
(Table 3) 8
Transport & Infrastructure: Completed Projects
# Project Name Length (KM) Location Cost USD Million
1 KKH Phase II (Havelian - Thakot Section) 120 KPK $1,315.0
2 Peshawar-Karachi Motorway (Multan-Sukkur Section) 392 Punjab + Sindh $2,889.0
3 Orange Line Metro Train - Lahore 27 Lahore $1,626.0
4 Cross Border Optical Fiber Cable (Khunjrab - Rawalpindi) 820 GB, KPK, Punjab $44.0
5 Pilot Project of Digital Terrestrial Multimedia Broadcast (DTMB) Murree $4.0
6 Hakla - D.I Khan Motorway 297 D.I Khan $1,166.8
Transport & Infrastructure: Under Construction Projects
7 Zhob - Quetta (Kuchlak) (N-50) 305 Balochistan $445.0
8 Khuzdar-Basima Road (N-30) 106 Balochistan $127.8
9 Hoshab - Awaran Road Section (M-8) 146 Balochistan $173.1
10 KKH Alternate Route Shandur - Chitral Road 153 KPK $98.2
11 Nokundi-Mashkhel Road 103 Balochistan $43.0
Transport & Infrastructure: In-Pipeline Projects
12 Up-gradation and Dualization of ML-1 and establishment of Dry Port near Havelian 1733 Havelian $6,806.0
13 Up-gradation of D.I.Khan (Yarik) - Zhob, N-50 Phase-I 235 TKPK - Balochistan $278.7
14 KKH Alternative Route Gilgit-Shandur Road 213 GB - KPK $181.8
15 Realignment of KKH Phase-I Thakot - Raikot Section 250 GB - KPK
16 Peshawar - D.I.Khan Motorway 360 KPK $1,005.8
17 Awaran - Khuzdar Road Section (M-8) 168 Balochistan $116.6
18 Dir Expressway 29.6 KPK $141.8
19 DTMB-A (Digitalize the existing three sites of PTV) Murree, Cherat, Kala Shah Kaku $14.1
Transport & Infrastructure: Long Term Projects
20 Mirpur-Muzaffarabad-Mansehra Road 200 AJK - KPK
21 Karachi Circular Railway 43 Karachi $1,900.0
22 Mashkhel - Pangur Road 200 Balochistan
23 Quetta Mass Transit Balochistan
24 Greater Peshawar Region Mass Transit KPK
(Table 4) 9
Gwadar: Completed Projects
# Project Name Cost USD Million Sponsor Total Jobs Created
1 Development of Port and Free Zone $300.0 Gwadar Port Authority 120
2 Gwadar Smart Port City Master Plan $4.0 Gwadar Port Authority 90
3 Pak-China Technical and Vocational Institute at Gwadar $10.0 Gwadar Port Authority 249
4 Gwadar Eastbay Expressway $179.0 Gwadar Port Authority 2,000
Gwadar: Under Construction Projects
5 New Gwadar International Airport $230.0 CAA 3,000
6 Necessary facilities of freshwater treatment, water supply and distribution $41.5 Gwadar Development Authority 1,600
7 Pak-China Friendship Hospital $100.0 Gwadar Development Authority 40
8 300MW Coal-Fired Power Project at Gwadar $542.3 China Communications Construction Company (CCCC) 1,000
9 1.2 MGD Desalination Plant $12.7
10 5 MGD Water Desalination Plant Gwadar $18.2 67% Federal Govt. 33% Provincial Govt.
Gwadar: In-Pipeline Projects
11 Construction of Breakwaters $123.0 Gwadar Port Authority
12 Dredging of berthing areas & channels $27.0 Gwadar Port Authority
13 Fish Landing Jetty and Fishermen Boat Making Industry on West Bay
14 Gwadar Smart Environment Sanitation System and Landfill Project
(Table 5) 10
Under Construction Special Economic Zones
1 Rashakai Special Economic Zone
2 Dhabeji Special Economic Zone
3 Allama Iqbal Industrial City
4 Bostan Special Economic Zone
In-Pipeline Special Economic Zones
5 ICT Model Industrial Zone
6 Industrial Park on Pakistan Steel Mill Land
7 Mirpur Industrial Zone
8 Mohmand Marble City
9 Moqpondass Special Economic Zone
CPEC: Transportation Plan 11
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CPEC: Energy & Communication Plan 12
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PwC World in 2050 Summary Report Feb 2017 13
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Over the past decade, CPEC has been instrumental in transforming Pakistan's economic landscape. The initiative has laid the groundwork for significant infrastructure development, energy security, and industrial growth. Both China and Pakistan should encourage increased industrial cooperation and technology transfer to foster innovation and upgrade Pakistan's industrial base. Cultural exchanges, educational collaboration, and tourism will further strengthen the bonds between the two nations and deepen mutual understanding. Expanding CPEC's reach to include other countries in the region, such as Afghanistan and Central Asian states, could open new trade routes and bolster regional connectivity. Moving towards sustainable energy solutions and green infrastructure will not only align CPEC with global environmental goals but also create opportunities for green investments and job creation. Embracing digital technologies and promoting e-commerce can enhance trade efficiency and broaden access to markets for small and medium-sized enterprises (SMEs).
 
References:
  1. https://www.gwadarport.gov.pk/project.aspx
  2. https://cpecinfo.com/government-to-enhance-gwadar-ports-scope-capacity/
  3. https://cpec.gov.pk/special-economic-zones-projects
  4. https://www.cpec.gov.pk/map-single/2 ; https://www.cpec.gov.pk/map-single/1
  5. https://www.pwc.com/gx/en/world-2050/assets/pwc-world-in-2050-summary-report-feb-2017.pdf
  6. https://systems.enpress-publisher.com/index.php/jipd/article/view/1117/866 pg.106
  7. https://cpec.gov.pk/energy
  8. https://cpec.gov.pk/infrastructure
  9. https://cpec.gov.pk/gwadar
  10. https://cpec.gov.pk/special-economic-zones-projects
  11. https://www.britannica.com/topic/China-Pakistan-Economic-Corridor
  12. https://www.britannica.com/topic/China-Pakistan-Economic-Corridor
  13. https://www.pwc.com/gx/en/world-2050/assets/pwc-world-in-2050-summary-report-feb-2017.pdf
 
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